Attempts to balance the books presided over by this 'Conservative' government
have really been about trying to increase receipts

The Eastleigh by-election shows that voters have lost confidence in the Tories, and their economic policy. It is time to face reality: taxes won’t help in reducing the deficit, and they stifle business. As one of Britain’s highest-income tax payers and the founder of Hargreaves Lansdown, which pays the highest tax as a percentage of turnover of any UK company, I would argue for cutting taxes across the board.

Take corporation tax. My solution to the Starbucks tax-avoidance controversy would not have been pillorying the errant. I would have abolished corporation tax. That would act like a magnet to world companies to manufacture here, trade here and employ here. People only see the short-term loss of some £42 billion in corporation taxes. They forget all the people those firms employ, the taxes those employees pay, the money they spend in the economy and the local businesses that service those companies.

In fact, rather than the Chancellor seeking international cooperation to tax companies, we should be the tax haven. Look at Hong Kong: the low-tax regime there results in a government surplus. Successive chancellors have tried to pass the country’s deficit problems on to corporate Britain because companies have no vote: they are seen as a soft touch. As a result, we are no longer attracting companies: Google has located in Ireland, obviously for tax reasons. I am sure Google would prefer to be in a low-tax Britain.

Some taxes directly destroy jobs, the most punitive being the imposts companies are expected to pay on their employees’ behalf. National Insurance is no less a tax than income tax. It deters employers from taking people on. Crazy employment regulation makes the situation worse. We only have to look at France, where regulations are completely mad, and can result in employers not wishing to hire any permanent staff at all.

Capital gains tax (CGT) is another menace. Its recent hiking to 28 per cent will undoubtedly have reduced the amount of tax collected, as entrepreneurs become unwilling to release assets that could be better utilised elsewhere. It makes people take tax decisions rather than investment decisions.

Huge contingent exposure to CGT drives successful people abroad, where they can release those assets without liability. At the same time, they’re no longer paying income tax or establishing new businesses in Britain. Similarly, I wonder how many business people, who can benefit from their massive incomes wherever they locate, have moved to offshore tax havens. If those taxes had been at a reasonable level, they might have stayed in the UK and the Exchequer would have benefited. For confirmation of the damaging effect of high taxes, George Osborne only has to look at the number of French who have moved to London, now “France’s sixth biggest city”. Tax drives out the best and brightest. Does Mr Osborne want to lose the best and brightest? Does he want to lose our greatest companies?

The biggest scandal of all is that the attempts to balance the books presided over by this “Conservative” government have really been about trying to increase receipts. There is a certain amount of tax you can impose on a nation and, whatever you do, above that rate the receipts do not increase. It creates an environment of tax avoidance, tax evasion and, in extreme cases, exodus. I suspect the latter is happening more. Are we, in perpetuity, to suffer death by a thousand “cuts”, based on the fallacy that if we even dared radically to curtail public expenditure we would spiral into depression? We will be in permanent recession unless we stimulate industry and the jobs it will create with lower taxes, rather than use ever-increasing taxes to pay for the unproductive public sector.

Quite simply, the Chancellor must reduce the deficit by cutting government expenditure. This is also, incidentally, the only way the country will ever regain its AAA status. Such a radical policy would cause a little consternation in the short term. But, I contend, Britain would rise from the ashes like a phoenix, rather than descend into the stagflation of a third-world country – and return to the grim days of the Seventies.